Draft Kings dealing with potential class action lawsuit

February 17, 2015

Although the UFC and Draft Kings have yet to formally announce an exclusive sponsorship deal in which the fantasy sports operator will become the company’s official sponsor, the two organizations have something in common:  people filing class action lawsuits against them.

As The Legal Blitz brought to light in his ATL Redline post, the Boston-based DraftKings is being sued in federal court in Florida claiming that DraftKings violated the Florida Deceptive and Unfair Trade Practices Act.

Essentially, the lawsuit claims that Draft Kings misrepresented the term “free” in its advertisements in order to induce consumers to deposit money to the website.  Commercials and ads which indicate “free sign-up bonuses” that match up to 100 percent of deposits for the site are untrue according to the complaint.  As described in the complaint, customers must enter fantasy contests and receive bonuses “in incredibly small increments” and rather than the 100 percent deposit match, they receive just 4 percent of every dollar they play.

In this case, the named plaintiff deposited $25 and only received $1 in return when he played in the fantasy contests.  It’s likely that if this case gains momentum, there will be lawsuits all over the country simulating this according to The Legal Blitz.

But, as he points out fantasy sports players registering with DraftKings probably did not know that they agreed to mandatory arbitration.  He points out a 2013 U.S. Supreme Court case which dictates that arbitration provisions are binding and enforceable.

While this may not be the ultimate result in litigation, it’s probably a likely outcome.

Payout Perspective:

It’s always advisable to have arbitration agreements in contracts to reduce the potential of litigation as well as control the potential legal costs. Many things that people sign have these types of clauses.  The way the clause is drafted is the ultimate issue on whether it may be enforced.  The class action lawsuit filed here is an interesting take on the fantasy sports “gaming” industry and how closely it resembles actual gambling.  Obviously, the enticements about “free” are stretched and while many consumers were likely duped into thinking that they’d be getting an incentive for playing, they will probably “let it go” in order to play.  Unfortunately, Zuffa probably does not have as easy a road to resolving its class action lawsuit.

Show Money Episode 1 discussing issues in MMA business

February 11, 2015

In collaboration with Bloody Elbow, I hopped on with Paul Gift and John Nash to discuss current issues in MMA business including the UFC Antitrust lawsuit, the Reebok deal, independent contractor status and the new Bellator.

Ruediger and Danzig latest to file lawsuits against Zuffa

February 5, 2015

Former UFC fighters Gabe Ruediger and Mac Danzig are the latest to file a lawsuit in the Antitrust class action in the San Jose Division of the Northern District of California.  Captioned Ruediger et al v. Zuffa, LLC, the Complaint dated February 4th mirrors the other 3 lawsuits previously filed by the other former UFC fighters.

A new law firm has emerged on behalf of the Plaintiffs, the Philadelphia-based Spector Roseman Kodroff & Willis, P.C. appears to have its hand in representing Ruedigger and Danzig although the pleadings were signed by attorney Joseph Saveri.

Bloody Elbow has obtained the lawsuit and you can find it here.

If you’ll notice, the paginations in this lawsuit are slightly off and seem to indicate a cut and paste into the pleadings.  The observation is neither here nor there, it’s just an observation.

Ruediger was a part of TUF 5 and fought with the UFC in 2006.  After time away, he had two more fights in the UFC in August 2010 and February 2011 (specifically 4 years ago as of the date of this writing).  He also fought in the WEC.  His last fight was in May 2013 for the Bamma USA organization.

Danzig is a recognizable name as you may recall he was the TUF Season 6 winner back in 2007 and had a long career with the organization.  You may recall he fought on a UFC on Fox 9 event without taking any money from sponsors.  He announced his retirement from fighting early last year.  Danzig was critical of the UFC in an interview with MSNBC this past January.

Payout Perspective:

Ruediger and Danzig are names that many UFC fans can recognize as the number of fighters joining the lawsuit increases.  Danzig is an interesting addition to the lawsuit as he seems like an articulate individual with definite opinion.  As previously reported, Zuffa is seeking to transfer the lawsuit to Nevada.  Also, the Plaintiffs have sent subpoenas to YouTube and Twitter to obtain the accounts of several key UFC employees.

MMA Payout will keep you posted.

More on Zuffa’s motion to transfer Antritrust lawsuit to Nevada

February 3, 2015

MMA Payout gives you a little more detail in what is going behind Zuffa’s request to move the Antitrust lawsuit filed by Plaintiffs in Northern California to Nevada.  Zuffa’s biggest arguments about the reason for transferring the case is that the Plaintiffs signed contracts/agreements which had forum selection clauses and that for convenience of the litigants, much of the case deals with information and individuals residing in Nevada.

Forum Selection Clauses

Zuffa argues that four of the seven Plaintiffs agreed to “forum selection clauses” in their contracts which would avail themselves to the jurisdiction to the state court or District of Nevada.  The other three Plaintiffs “agreed to forum selection clauses” which indicated that “any disputes arising from or relating to” their agreements would be determined in the state court of Nevada.

Convenience Factors

In addition to the argument that the Plaintiffs agreed to settle legal disputes in Nevada, Zuffa argues that for “convenience of the parties” a transfer to the federal court in Nevada “unequivocally favors” the move of venue.  Zuffa contends that the “contracts and business relationships of Zuffa” are located in Nevada as well as the potential witnesses and documentary evidence is located in Las Vegas.  Zuffa also contends that non-party witnesses are located in Las Vegas which include executives from WSOF, Top Rank, the Wynn Las Vegas and Muay Thai promoter Lion Fight Promotions.  Its not clear from the pleadings whether Zuffa intends to call these witnesses or if these are examples of the argument that there’s an obvious need for the transfer of venue.

Zuffa argues Plaintiffs signed agreements with forum clauses

In its pleadings, Zuffa argues that Fitch, Garza, Le and Vera agreed to “at least one Bout Agreement, Merchandise Agreement, or Promotional and Ancillary Rights Agreement containing a “forum selection clause” which gave their consent “to the exclusive personal jurisdiction and venue of the state and federal courts located in Clark County, Nevada for any action brought by either party to interpret or enforce any provision of this Agreement.”

Plaintiffs Quarry, Hallman and Vasquez have different forum selection clauses which dictated that any dispute arising from their contracts be decided in “the Eighth Judicial District Court for the State of Nevada, sitting in Las Vegas.”

Limited contacts with San Jose

To buttress its argument that the venue should be transferred to Nevada, Zuffa also compares the amount of events it has held in San Jose (5), where the lawsuit is currently filed to Vegas where it states has staged “more than 30 major MMA events in Las Vegas.”  It also points out that only Cung Le is the only Plaintiff residing in San Jose while all the others do not reside in that forum.  It also states that while Strikeforce was based in San Jose, all of the pertinent document reside at Zuffa headquarters in Vegas.

In its legal arguments, Zuffa asserts that the District of Nevada is an appropriate forum because this lawsuit could have been filed there rather than in San Jose.  It also cites case law which it argues should be the authority to enforce forum selection clauses in contracts. Thus, since the Plaintiffs signed its contracts, they should abide by the forum selection clauses in the contracts.

One of the key legal distinctions made by Zuffa is that it claims that Plaintiffs engage in “artful pleading” when it filed its Complaint as the Plaintiffs argue that they are not individually enforcing their contracts and thus their claims fall outside of each Plaintiffs’ individual contract.  Zuffa contends that this is not the case as the contracts are “inextricably linked” and thus must avail to the forum selection clause.

Possible Zuffa Counterclaim?

It also indicates in one of the last sections of its motion to transfer pleading that it might seek to counterclaim with a breach of contract claim against the Plaintiffs.  Basically, the breach would be the Plaintiffs filing a lawsuit outside of Nevada despite signing a contract indicating that it would avail itself to the jurisdiction of Nevada.

When will this be decided?

The motion will be heard by the US District Court for the Northern District of California in San Jose – the place where the Plaintiffs filed its lawsuits.  Zuffa would like to have this motion decided sooner than later and has requested a “Motion to Advance the Hearing Date” from May 7, 2015 to March 26, 2015.  They have also indicated that the motion should be heard “on the papers” rather than oral argument.  Basically, Zuffa would like the Court to decide the motion based on the pleadings filed with the Court which may happen with the discretion of the Court.  This will obviously not sit well with the Plaintiffs who would probably want a full briefing schedule as well as oral argument.  The parties have already butted heads on these issues.

Zuffa Motion to Transfer Venue by JASONCRUZ206

Motion to Advance Hearing by JASONCRUZ206

Payout Perspective:

We are beginning to see the legal maneuvering that is occurring with the pre-discovery procedure between the parties.  Obviously, Zuffa’s motion will be met with opposition from the Plaintiffs as well as opposition to the motion to have the motion heard in advance.  So, two distinct procedural issues before we even get to Zuffa actually answering the Complaints.  This does not even consider the probability of a Zuffa Motion to Dismiss the Complaint which could occur after this initial transfer issue is decided.  Lots of paper in the next couple months before we even get to something substantive in this lawsuit.

UFC files motion to transfer Antitrust lawsuit to Nevada

February 2, 2015

On Friday, Zuffa  lawyers have filed a motion to transfer the venue of the Antitrust lawsuit in the Northern District of California in San Jose to Nevada where the Zuffa headquarters are located.  The hearing date is set for May 7th although Zuffa requests to advance the date to March 26th.

In its filing, Zuffa anticipated that the discovery process will be “contentious” as it appears that the parties already dispute a briefing schedule to file pleadings.  Zuffa also cites to subpoenas issued to third-parties for this case which Zuffa indicates violates the federal rules. Zuffa was granted an extension to address the three complaints filed by the plaintiffs.

Instead of an Answer to the Complaint, it has filed a Motion to Transfer Venue.

Payout Perspective:

We had predicted this possibility back in December when the Complaint was filed in San Jose.  Zuffa is based in Nevada and has a viable argument under the federal rules of civil procedure that it should be able to defend its lawsuit in its state.  Zuffa argues that plaintiffs signed UFC contracts with the proviso that any legal dispute is filed in Nevada.  Essentially, they agreed to the “forum selection” as part of a clause in their contract.  It also argues that for convenience purposes the lawsuit should be transferred since most witnesses are located in Nevada.

MMA Payout will keep you posted.

NYS Assembly Speaker Silver arrested on corruption charges

January 22, 2015

New York State Assembly speaker Sheldon Silver was arrested on federal corruption charges on Thursday.  The charges include mail fraud, wire fraud and extortion.  In MMA circles, the state assemblyman had been the one that prevented a vote on the legalization of MMA in the state.

The Complaint obtained by the NY Times alleges that Silver has received “more than $6 million in outside income from two law firms since late 2002.”  This includes “undisclosed bribes and kickbacks” where Silver used his position and power to “induce real estate developers with business before the State to retain and continue to use a Real Estate Law Firm controlled by an attorney who previously had worked as Silver’s counsel in the Assembly and who caused Silver to be paid for such referrals by the Real Estate Law Firm,” reads the Complaint.

UFC head Dana White has accused Silver of blocking a vote which could potentially grant the legalization of professional MMA in the state.  New York is the only state which prohibits professional MMA.

Silver had served as speaker for more than two decades.  So far, there is no clear indication as to who Silver’s successor would be.

A lawsuit is pending in which Zuffa has sued the state for its legislative ban on professional MMA.

Payout Perspective:

The news of Sheldon’s arrest could breathe new life into the annual Zuffa lobbying activities in Albany this spring.  While Sheldon’s removal from his position may not mean that New York passes legislation legalizing professional MMA in the state, it gives lobbyists new hope that they can obtain a vote in the Assembly.  This story is just getting started and MMA Payout will keep you posted.

WWE sued by former wrestlers

January 20, 2015

Two former WWE wrestlers have sued the company in Federal Court in Philadelphia claiming they suffer from serious brain injuries as a result of “repeated concussions” in the ring.  The lawsuit is said to be similar to the one filed by “Billy Jack” Haynes in Oregon.

Vito “Big Vito” LoGrasso and Evan “Adam Mercer” Singleton are the plaintiffs.  The lawsuit seeks class action status and accuses the WWE of “selling violence” and turning a blind eye to the health of its wrestlers including “ignoring” concussions suffered by the plaintiffs.

LoGrasso wrestled for the WWE from 1991 to 1998 and from 2005 to 2006.  He claims to suffer from “serious neurological damage.”  Singleton wrestled for WWE from 2012 to 2013 and was one of the youngest wresters in WWE history at 19.  He also claims to have “an array of serious symptoms” as a result of his time in the WWE.

The WWE’s attorney, Jerry McDevitt, claims that the company has “never concealed any medical information related to concussions, or others.”

The lawsuit seeks unspecified economic damages and medical monitoring.

LoGrasso is now 50 years old and Singleton is only 22.

Via Reuters and AP/ESPN

Payout Perspective:

It will be interesting to see if this lawsuit will be tied with the Haynes lawsuit.  One of the law firms involved in the LoGrasso/Singleton lawsuit may be involved with the Haynes litigation as well. The WWE will file its response to the Haynes lawsuit shortly.  LoGrasso’s stint in the WWE should help with the claims as both Haynes and Singleton had shorter stints with the company.  These lawsuits appear to be patterned after the NFL concussion lawsuits.  We will see if more wrestlers join the litigation which may evolve into a class action.  If that is the case, it could spell big trouble for the WWE.

MMA Payout will keep you posted.

Wanderlei Silva sues NSAC seeking reversal of lifetime ban, fine

January 20, 2015

MMA Fighting reports that Wanderlei Silva has filed a lawsuit against the Nevada State Athletic Commission.  Silva claims that the commission overstepped its boundaries in issuing him a lifetime ban last year.

In addition to the ban, the NSAC issued a $70,000 fine this past September.  The punishment arose out of his failure to take a drug test in lead-up to a fight with Chael Sonnen this past July.  As we know, the fight never happened.

“This case encapsulates agency aggrandizement at its worst where disciplinary ation was taken against a non-licensed person,” reads the introduction of Silva’s Complaint filed by Ross Goodman in Clark County, Nevada’ District Court.

Silva’s attorney argues that the NSAC did not have jurisdiction over Silva since he was not licensed in the state of Nevada at the time officials attempted to drug test Silva.  Silva’s attorney claims that the statutes which the NSAC must follow only pertain to a “licensee.”

Silva is looking for the NSAC ruling to be reversed and set aside which could the clear pathway for Silva to fight in Nevada again.

Goodman is familiar with combatting the NSAC.  In April 2012, he sued the NSAC on behalf of Nick Diaz.

W. Silva v. Bennett and NSAC

Court filing via MMA Fighting.

Payout Perspective:

As we indicated in December, the process for appeal of an administrative ruling is usually through filing a lawsuit seeking a “petition for review.” Still, we wonder why Silva is going through this legal process when he could work around the suspension in Nevada and still fight. Silva’s attorney makes an interesting legal argument based on the Nevada statutes which the commission must follow. We will see how the judicial system handles interpretation of these statutes and this case.

UFC releases Athlete Outfitting Policy

January 16, 2015

The UFC Athlete Outfitting Policy was revealed Thursday and it has brought up the question as to the independent contractor status of UFC contracted fighters.

Bleacher Report was the first to report on the new policy which details the responsibilities of fighters and their corners.  A newly established UFC Equipment Department has been put in place to implement the uniform policies.  This weekend’s UFC Fight Night 59 will be the first time the Equipment Department will meet with fighters to go over the new policies.  The department will work with fighters to come up with a uniform that will fit their own style.  Presumably, this means that fighters can choose between board shorts versus vale tudo-type tights.

Fighters will be able to choose the colors provided with the higher-ranked fighter per UFC rankings getting first choice.  A fight between two unranked fighters will work with matchmakers to come up with colors.

While this policy is not new for a sports league to implement, it stirs up the issue of the limits the UFC can instruct its fighters, who are characterized as independent contractors, to do their job.  MMA Fighting’s Luke Thomas brings up this issue in which he questions the boundaries that the UFC is pushing.

The short story is that there are advantages for an employer to have independent contractors instead of employees.  For example, the employer does not pay certain employment taxes, health care, wage and hour considerations, pension and are not subject to certain liabilities.

Payout Perspective:

The basic legal premise to determine whether a worker is an employee versus an independent contractor is whether the employer “retains control” over the worker; essentially, whether the employer can tell the worker how to do his or her job.  There are many iterations and interpretations of what retaining control is and whether the employer must exert actual control.

Although there are some differences, the WWE has a similar policy.  All of the costumes the wrestlers wear to the ring are approved by the WWE.  Even Brock Lesnar’s short sponsors were approved by the company.  Like UFC fighters all of the wrestlers in the WWE are independent contractors as well.  That does not mean this is right, it’s just another example.

At the UFC-Reebok press conference, Dana White indicated that he had spoken with UFC fighters about the uniform policy before the announcement.  Yet, there have not been any fighters that have come forward to say that they were contacted prior to the press conference.  Moreover, it’s not clear if any fighter provided their input on the deal.  The UFC will indicate that it is working with its fighters to come up with their own style for the uniform.  Thus, there is input as to what is created for each fighter.  So while fighters must abide by a uniform policy, there are some variations within the policy that allow for each fighter (and presumably their corners) to include their own style.   It’s just that the styles will be limited to what is approved by the new UFC policy.

But, it’s clear that the new policy has eliminated a certain amount of freedom previously known to the UFC fighters.  Not only are they giving up their sponsors (that aren’t Reebok), they must now abide by a certain set of rules or else there will be penalties.

One has to think that the UFC worked with its lawyers to shape this policy.  Still, we’re in that legal gray area where on one end you must ask whether the UFC is retaining control over its independent contractors by implementing these rules in restricting what they wear.  On the other, you ask whether giving workers a uniform is enough control over them to label them an employee rather than an independent contractor.

Golden Boy-Schaefer settle lawsuit, avoid arbitration

January 11, 2015

Kevin Iole of Yahoo! Sports reports that Richard Schaefer and Golden Boy have settled its lawsuit arising out of Schaefer’s departure from the boxing promotion last year.  The settlement leaves Al Haymon with several key boxers for a shwow .

Golden Boy sought private arbitration to settle the departure of Schaefer from this past spring.  Golden Boy was looking for $50 million in damages.  Along with Schaefer, Floyd Mayweather and several key employees of Golden Boy left.  As part of the settlement between the parties, Golden Boy relinquished the rights to several of the promotion’s top fighters notably Adrien Broner and Danny Garcia.

Golden Boy will retain the rights of Amir Khan, Lucas Matthysse and Leo Santa Cruz.  The fighters remain advised by Al Haymon.  The LA Times’ Larry Pugmire indicated that Marcos Maidana will leave to join Haymon (via Bad Left Hook).  According to Iole’s article, Schaefer will be precluded from promoting for a period of time.  But, he’s likely to officially join the Haymon/Mayweather camp.

Payout Perspective:

The settlement saves all parties a lot in legal fees.  It also means that Al Haymon and his “advised fighters” can move forward with a possible network debut on NBC and NBC Sports.  Golden Boy has a thinner roster but it will likely focus its efforts around Canelo Alvarez as the centerpiece for the company.

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